Not only in sheer amounts, but also in growth rates, investments flowing into Kazakhstan remain dominated by those in upstream hydrocarbon projects and ventures, leaving other sectors, in turn led by mining, far behind as numbers recently posted by the National Statistics Agency demonstrate.
In the first eight months of the current year, Kazakhstan attracted close to 6,389 billion tenge in capital investments, statistics show. More than a third of that amount went to the oil-rich province of Atyrau in the extreme northwest of the country, which harbours Kazakhstan’s largest field Tengiz and the offshore block of Kashagan, as well as a number of older but still productive fields upstream the Emba river. From here, the pipeline to the Russian Black Sea port of Novorossysk carries the bulk of Kazakhstan’s crude oil to the European markets.
But even though it produces around half of the country’s crude oil, from a socioeconomic point of view the Atyrau region remains one of the most depressed areas in all of Kazakhstan. Expressed in Kazakh currency, the area nonetheless attracted 2.295256 trillion tenge in capital investments in the first 8 months of 2018, an increase of 32.7 per cent from the same period of 2017, representing around 15 billion US dollar. But since between the two periods the tenge lost in the order of 20 per cent of its value against the greenback, the corrected increase remains below 5 per cent on-year. On a national level, capital investments grew by 21.4 per cent, which means that in hard currency they remained all but flat.
Investors’ preference for oil is easily explained by a separate report from the Statistics Agency, which shows that output values of oil, gas and gas condensate in January-August this year rose by 5.3 per cent on-year to just over 8 trillion Kazakh tenge, overwhelmingly dominated by crude oil accounting for KZT7.9 trillion. In the first 7 months of this year, Kazakhstan exported worth in the order of $34 billion in goods, just below three quarters consisted of crude oil.
No sector-wise statistics over the current year have been released so far, but looking at data over previous years strongly suggest that the overall pattern has not fundamentally changed. In 2017, the investment flow into Kazakhstan’s “industry” came close to 4.7 trillion tenge, an increase of 3.4 per cent from the previous year, the second report by the NSA shows. “Industry” means by and large oil and gas, since all other industrial sectors are separately categorised.
Cross-section-wise, investments in 2017 increased by 5.3 per cent from 2016 to 8.77 trillion tenge. Way after hydrocarbons, the mining sector comes second with just below 3 trillion tenge in investments through 2017, a 1.5 per cent nominal increase on-year. Agriculture, which is the third-largest source of external income for Kazakhstan after hydrocarbons and minerals, only attracted close to 348.5 billion tenge in investments, more than twice the amount it posted in 2015, but still dwarved by its rivals.
It all means that the Kazakhs remain first and foremost a nation of drillers and diggers, despite decade-long efforts by the government to change the pattern in favour of farmers and manufacturers. To get there, there is still a long way to go, including a major shift in cash flows – and the current trends just show the opposite.
By Charles van der Leeuw for Newsline, based on data from the National Statistics Agency of Kazakhstan.
